Working families hit hardest by medical debt, file for bankruptcy

There are various reasons Arizonians file for bankruptcy, but they may all stem from the same root-total bills, whether they are medical, credit card or mortgage bills, are more than Arizona residents can manage and, according to a study conducted in 2009, the rising cost of medical care contributed to around 60 percent of personal bankruptcies.

According to statistics, full-charges at hospitals increased at a pace four times that of inflation and even faster than hospital costs. People pay varying amounts of these medical costs, depending on their health coverage, and often the ones with the least insurance get stuck with the highest bills, driving them to declare bankruptcy, whether it is Chapter 7 or Chapter 13.

Around 49 million people are uninsured currently and the expanded health-care-law expected to come into effect by 2017 will only cover around 27 million of the uninsured, still leaving more than 20 million Americans outside of its scope.

According to a commission on the uninsured, most people who do not have healthcare coverage belong to working families-the U.S. Department of Health and Human Services confirmed that around 63 percent were in households earning less than $50,000 a year. Their income fell the most between 2000 and 2010-9.6 percent compared to the 5.5 percent reduction for those earning more than $50,000.

Arizona residents earning lower wages and still trying to make ends meet may be eligible to file for Chapter 13 bankruptcy. Offering similar debt relief to Chapter 7, filers of Chapter 13 continue to pay their bills but do so at a rate fixed by the court according to their income. People who have some assets they wish to hold onto may prefer filing for Chapter 13. Whichever option they choose, Arizona residents should consider all their options and try to regain their financial health without compromising their physical health.

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